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Evening markets: Corn, sugar find support from rumour mill

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Could US farmers have been prevented from planting as much as 20m acres of corn by the foul Midwest spring?

 

That is one theory doing the rounds on ag chat rooms, after an alleged tweet by the US Department of Agriculture’s Risk Management Agency, which handles prevent plant claims.

 

Karl Setzer at AgriVisor, for instance, noted “a tweet from the USDA’s RMA indicating prevent plant acres on corn could reach 20m this year is gaining the attention of the market”.

 

The tweet (which Agrimoney did not seen, and cannot confirm existed) has now been removed, although there are other large figures for area losses going around too, with focus for instance on a ProFarmer article from last week.

 

‘Rains returning’

Whatever, the chatter - combined with the lower-than-expected US corn condition rating released overnight by the USDA – helped corn futures end higher.

 

The Chicago December corn lot closed up 1.0% at 4.31 ½ a bushel, while the spot September contract added 0.7% to $4.25 ½ a bushel.

 

And this despite a benign Midwest weather outlook for now, in a critical period for the corn crop, with the weather-sensitive pollination period beginning.

 

“Weather leans negative [for prices] with rains returning to the central and eastern Midwest next week that will limit stress areas to 20% of growing areas,” said Richard Feltes at broker RJ O’Brien.

 

Maxar flagged a “wetter central Midwest” in the six-to-10 day outlook, saying that “an upturn in rains across the central and eastern Midwest would improve moisture and ease any stress on corn and soybeans.

 

“However, some spotty dryness may linger in the far western Midwest”.

 

Soybeans vs rapeseed

Such ideas were enough to ensure a weaker close for soybeans, which for November ended down 0.3% at $9.03 ¾ a bushel.

 

The lot earlier fell back below the psychologically important $9.00-a-bushel mark, only to find support at its 50-day moving average, at $8.99 a bushel.

 

“Soybeans are lower on US weather despite a nearly six-month high in European Union rapeseed prices,” said Terry Reilly at Futures International.

 

In fact, best-traded Paris rapeseed futures for November added 0.5% to E375.50 a tonne, the best finish for a nearest-but-one contract in eight months.

 

“Rapeseed continues to rise on supply shortages and following vegoils higher,” said UK-based CRM AgriCommodities.

 

In the UK, there is talk of a poor start to the harvest too, as relayed to Agrimoney.

 

Hard vs soft

As for wheat, Kansas City hard red winter wheat – which has priced itself close to corn in a bid to gain feed demand – found some support from the yellow grain, closing up 0.5% at $4.31 ½ a bushel for September delivery.

 

But Chicago soft red winter wheat, the world benchmark, was less decisive, ending unchanged at $4.87 ¼ a bushel for September delivery, so managing to stay narrowly above its 100-day moving average.

 

This despite some evidence of importer demand, with Jordan buying 60,000 tonnes, Tunisia tendering for 92,000 tonnes, and Egypt’s Gasc purchasing 300,000 tonnes.

 

And at higher prices than at Gasc’s previous tender, six days ago, with increases both to costs of wheat (from the winning Black Sea origins) and shipping.

 

Tour results

Early results from the Wheat Quality Council tour of North Dakota pointed to above-average spring wheat yields, with one route on day pegging it 38.6 bushels per acre, above the figure of 34.7 a year ago, and a five-year average of 33.8 bushels per acre.

 

A second route, further east, came in with a figure of 50.0 bushels per acre, above 40.3 a year ago, and a route average of 48.0 bushels per acre.

 

And a third came in with a figure of 71.0 bushels per acre, compared with 30.6 bushels per acre for the route last year, and a route average of 42.7 bushels per acre.

 

Still, in North Dakota, Tregg Cronin at Halo Commodity Company said that “the concern across the northern Plains is disease and lodging as moisture levels remain excessive on a nearly mature crop.

 

“Wheat is beginning to lodge in South Dakota, a condition that is likely to make its way into North Dakota.”

 

Minneapolis spring wheat ended down 0.1% at $5.20 ½ a bushel.

 

Minimal frost damage

Among soft commodities, New York arabica coffee tumbled again, closing down 2.7% at 102.30 cents a pound for September, a one-month closing low, amid waning concerns that frost earlier this month caused much damage to the Brazilian crop.

 

Cepea said, after a market survey, that “the first estimates showed only small damages in the biggest coffee-producing regions”.

 

According to merchant I&M Smith, “this is very much a general view on the part of the industry and speculative sectors of the coffee market”, a factor which “has contributed to the softer nature of trade”.

 

Brazil output drop?

However, New York raw sugar for October soared 3.6% to close at 11.98 cents per pound, after trading in heavy volumes, just about wiping out losses of the previous four sessions (and bouncing from a two-month low of 11.39 cents a pound hit earlier).

 

Support was gained from talk that data from industry group Unica on the Brazilian Centre South cane crush for the first half of July will show a large drop in sugar output, reflecting weaker returns to be gained by mills from the sweetener than from ethanol.

 

(Ethanol parity is rated at 14.00 cents a pound by Marex Spectron, and higher by some other commentators.)

 

An investor poll by S&P Global Platts points to a Centre South sugar production figure of 2.02m tonnes for the first half of July, “a plunge of 16% year on year”.

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